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tv   Squawk Alley  CNBC  February 9, 2016 11:00am-12:01pm EST

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good morning it's 11:00 a.m. at viacom headquarters in new york city. it's 11:00 a.m. on wall street and "squawk alley" is live.
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welcome to "squawk alley" for a tuesday, jon fortt, kayla tausche and myself at post 9 along with investor jason who we're going to check in with in just a moment. some moderate chop as a pilot might say, dow is down about 97 points. we're going to get to jason in a second. first morgan brennan with some breaking news. >> carl, that's right. railroad headlines for you. canadian pacific planning to abandon its proxy fight for norfolk southern according to dow jones, also mulling proxy revolutions to push norfolk into takeover talks. in other words canadian pacific considering a potential shift in strategy to push the eastern railroad to engage in these takeover talks. this, of course, comes on the heels of three rejected offers over the past few months. the most recent being in december. and it really -- it's a bit unclear about how cp's ceo hunter harrison, the street fight, the strategy is now going
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to shift. but again, hearing that it is going to shift according to dow jones. you take a look at the stocks right now, canadian pacific is up 1%. norfolk southern down half a percent. >> big story in transports, morgan. thank you very much. let's begin with the markets today. we rebounded from the lows of the session, after all major averages fell by over 1%. techs still leading the way lower for '16 down nearly 15%. to start the year. jason, man we've talked to you about what was coming in valuations for awhile. i remember you on this show said a quarter of start-ups in a couple of years would disappear. i assume your take is that we're on our way. >> yeah. i mean listen, the party ended, and now we're in the punishment phase. everybody's grounded. and professional management is being brought in to a lot of the start-ups out there and we're going to see a lot of changes at the top of companies and obviously valuation from the private sector up to the public markets have been corrected.
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you know the public markets have gotten off easy compared to what i see in the private markets where we're seeing valuations get cut in half. sometimes by two-thirds. >> want to talk to you about some of that private company action benefits. i know you followed the company. you talked to the former ceo. they've got a new ceo, it appears this unicorn's magic growth model had some problems. running afoul of regulators in a way. in the way that they were signing people up for insurance. what does this signal? i mean lots of talk about that at the crunching last night. what does this signal about where we are in these kind of world changing start-ups like zenefits. >> so zenefits is one of the fastest growing companies in silicon valley history and i'm a small investor in the company, actually. and i'm good friends with the new ceo david sachs who was the coo. and really this is the professional management era of the unicorn phase of silicon
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valley that's occurring. going fast and loose and, you know, sort of firing and then aiming the gun is not going to cut it in a market like this, where people are getting premium valuations, but then maybe not operating at a high level. and so, parker, who was running zenefits who deserves a lot of credit, resigned and david sachs has taken over. david sachs is the best operator in silicon valley on an operational basis. him and sheryl sandberg are the two best operators i would say. he's in charge now and it's day one and i think they're going to clean up a lot of the loosesy goosy approach they had to operating in a highly regulated market. >> two of the most anticipated potential ipos of this era, uber and airbnb are also known for flouting regulators. what does this say about not just zene fits but a lot of these growth models that could run into similar problems? >> if you look at airbnb and
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uber. obviously i have a position in uber. if your product is loved by consumers, and they're willing to fight for you, as consumers have been willing to fight for their right to airbnb their apartment or fight for their right to have uber in their city, you can push the envelope. but if you're zenefits and you're operating in the insurance base i'm not sure their customers are going to go fight for them at this point. maybe in the future. so if you want to push the envelope on regulation, you have a very short window to do that. facebook did it, as well. facebook got a huge fine and a big audit by the ftc for doing things that were a little shaky, and they corrected their ship. so you can have these moments at a unicorn, at a high growth start-up where you're in the gray area, where you push the envelope. but that's a needle that you have to thread very deftly and you have to get on the right side of operations and be growing in a very strong way if you want to do anything that's nontraditional and twitter is the perfect example of that. >> jason, on valuation, though, in the public markets investors
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wake up every single day and decide what a particular stock is worth. on the private side, whose responsibility should it have been? the board? the investors who are throwing the money at these companies or ultimately the executive teams of these companies, to say actually, maybe that valuation is getting ahead of ourselves, and what we're actually doing right now. is there no responsibility on that front? >> yeah, well kayla the public markets are doing such a fabulous job of valuing linkedin by dropping a third of the valuation. so, in a day. so i don't think the public markets are great at it either. valuations is, you know, part art and part science. it's alchemy, right? and it's how investors are feeling at the moment. right? their confidence level. and we have a collective bubble ptsd that everybody from the public markets to the private markets is dealing with right now. and let's face it when things double up we all feel great. but when things triple up it feels like maybe it's time to leave the casino and go to bed. that's what happened in the last
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year. people had tripled up, whether it's public markets or private markets. and people said, i'm just going to take my chips because i'm scared. and nobody can explain to me what's going on in the market exactly. why is oil so cheap? why are consumers spending like crazy? casinos are filled, people are buying iphones yet the market is scared. to me we got ahead of ourselves with value sags and people are neverous that the bubble has to burst because we all lived through the last two or three bubbles bursting. periods. and it's about time for that, right? so i like this correction a lot because now i'm seeing in the private market all the angel investing i'm doing, people want a $10 million to $15 million valuations two years ago. last year you know, in the fall, it was $7 million to $10 million. and now yum yum we're back down to $4 million to $5 million valuations. and that's where i make my money. yum yum, i'm going to invest in more companies this year than i did last year. >> that is the first yum yum we've heard today, jason. >> yum yum. >> you mentioned twitter. the uproar over the weekend after these reports the company was ditching the chronological
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feed, instead opting for something sim rar to what you see on facebook. of course jack dorsey did take to twitter but the story has a lot worried about the future of the social network. now this morning a blog out of twitter, jason introducing what they're calling first view. which would be an ad slot on the time line when you logon, a promoted video, earnings tomorrow, what's your take on all of this? >> yeah, so, adam bain, phenomenal. he probably should have been the ceo. but he wanted to work with jack and jack's a halftime ceo. jack is getting the product in line. but, the question is, you know, when jack joined the stock was at what, 30? when he took over at ceo. and now you have a halftime ceo and a half price stock. and that's the narrative right now. jack has a very short window to get this product growing. if your product is not growing in silicon valley it is dying. sideways, people, is death in technology. so he has to get the product to grow. now this new idea that while you're away, if executed properly, could have a material
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impact on the product. because the number one problem with twitter is also it's number one strength. realtime. you open it up, you see what's happening right now. but what's happening right now might not be the best of what's happened in the past 24 hours. so consumers typically, who are the lower end consumers, less addicted to twitter, not journalists, not powerful people in the world, civilians as we call them, when they open twitter it's like what are you guys talking about? i don't get it? i can't keep up. now they're going to see all the important tweets from the past 24 or 48 hours or 72 hours. it's a brilliant idea. but boy jack has a real issue on his hands because, again, we're entering the professional, you know, management era, and he is, let's face it, this is his first time running a public company and he decided to run two at the same time. he has to get somebody to run square and i think his heart's in twitter so he has to have more time to work on twitter's pretty significant growth problems. they have great revenue but you have to have growth, sideways equals dying. >> well, and he's trying to clean up the product, too.
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introducing the trust and safety council. on one hand you want to make it a cleaner product, a more enjoyable product. get out the bullies. does this feel like a high school principal to you? what will this trust and safety council actually do? >> yeah, this is a huge, huge blunder and mistake. you know, the platform was built on being, you know, a free speech platform, and it has anonymity. in other words i can create an account called goldman sachs elevator and make fun of goldman sachs all day long. which is pretty easy to do and pretty fun. if you go and make it real names, which is what facebook does, it becomes safer, people behave less rambunctiously and you're going to get rid of some of the hate speech. you're going to get rid of some of the teasing and harassment but you can't make twitter or any forum like reddit, facebook or aol chat rooms, if they have to be the arbiter of free speech, that will never end. because anonymous platforms cannot be moderated. >> jason, your take on first view? first view scares me, because it
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sounds a lot like preroll advertising. it sounds a lot like auto play. it doesn't sound very targeted. is twitter perhaps going too far and perhaps damaging engagement in the reach per scale? >> it's a very astute observation, actually. adam bain is on fire in terms of revenue. the platform is amazing. when you go to it is one of the most amazing platforms in terms of placing ads. the things you can do are very sophisticated. but i think the ad product is way far ahead of the growth of the main product. and what that will cause is, it can cause exactly what you're saying which is this feels overmark evidented. there's too much advertising. and it could make users go away. the good news is adam's pretty sophisticated. jack is a pretty sophisticated project manager. they're not going to do overdo it with people. i don't think they'll drive users away. they're pretty savvy about that.
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they could get desperate. this is the problem with jack being halftime ceo. every problem they have is going to go back to if jack put another four hours a day in, would they have solved their problem? i think jack's got to make a decision and he's got to make it this year, and he's got to make it in the first half of the year, because i think the market's going to give him another six months and they're a take-out target right now. there are a lot of people circling. i know a lot of private equity firms, those kind of players who are sort of say something, hmm, under $10 billion, yeah we could buy this, take it private, clean it up, cut some staff. so those discussions are well under way. just like i told you, you know, in the summer, remember i told you that people were thinking about that with yahoo! and that marissa was done, that's turned out to be correct. i'll turn out to be correct that twitter is, you know, on the chopping block, and somebody might buy it. and put in different management and private -- make it private. and if you guys are going to cut linkedin's valuation like this when they hit their targets you're not going to get all of our companies to go public. this is the standoff between the public and the private markets. you guys can't knock off a third
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of a company's value when they hit their target. it's unfair. >> certainly that's what a lot of private companies ceos are taking to heart right now. jason, we're out of time. we'll take a lot more next time you're on. thanks again. >> thanks for having me. >> mean time, in washington, the white house releasing the budget for '17. eamon javers is in washington to break that down. >> the grand total this year for the president's final budget is $4.15 trillion. that's what the president is proposing for outlays for 2017, the last year he'll be able to propose a federal budget. also total receipts he's proposing of $3.64 trillion. and a deficit of $503 billion for that year of 2017. running through some of the items on the president's wish list, looking through a massive document here, we spotted a couple that will be interesting to wall street, including doubling the funding for the s.e.c. and cftc by 2021. there's $111 billion over ten-year financial fee in here.
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the fee is on liabilities of large u.s. financial firms. that's a way to raise money by imposing a fee on some of the biggest players on wall street. also there's $19 billion in spending year for federal resources for cybersecurity. over $11 billion to hunt down terrorists. $1 billion for the moon shot to cure cancer that you've heard so much about. and $1 billion to expand prescription drug abuse treatment access, carl. >> all right. thanks so much, eamon javers in washington with that. meanwhile we want to get a check on the markets right now. the dow had been down as much as 145 points earlier in the session. we did get a little stability in oil, rather, and that has helped the markets stabilize a little bit, although wti is still below 30 bucks a barrel. meanwhile shares of viacom hitting hard after revenue missed analyst estimates currently down 13% as that conference call winds down. the company did announce a deal with snapchat that allows it to sell advertising on the social network's behalf. on the flip side, netflix seeing a nice gain this morning up
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about 3.75%. but the woes for many tech stocks, carl, still win. we'll talk more about that later on this hour. >> when we come back, we just mentioned viacom. but media overall struggling with fox, also falling after an earnings miss. what to expect from disney tonight. they, of course, report after the bell. and then chesapeake energy shares tanking yesterday, leading many to suspect the company's heading for bankruptcy. we'll look at what's next for that company. and enterprise tech having a tough '16 just check out red hat. down about 25% for the year. cfo will join us in an exclusive interview on cnbc when we continue in a moment.
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really rough days for shares of viacom down 14%, trading at levels the stock hasn't seen in 4 1/2 years after reporting a miss on revenue. here's viacom's ceo on the conference call this morning. >> i will do my utmost to continue to drive viacom's operations forward and restore stock to its proper valuation. >> we're continuing to watch media stocks as disney is expected to report earnings later today. of course we got 21st century fox yesterday afternoon. joining us now is todd junker, senior analyst at bernstein. todd we just heard philippe dauman's commitment to returning the stock to its pry other valuation. what happens if that was based on a legacy business and the revenue opportunities in the future just aren't there?
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>> kayla that is the issue. the earnings report itself, the eps number was in line, the revenue was at a light but what the market is always looking forward to is there's nothing that philippe dauman can do in our opinion to get kids and teenagers to put down their ipads and go back and watch tv the old-fashioned way with all the advertising and prescription fees that it carries. as has happened in many quarters before, we got some new news during the call about future growth rates, in this case on what they call the affiliate key line it looks like it's going to be much slower than the market expected. when you think about that and the advertising growth rate and the relevancy of linear ad-supported television networks to the audiences that viacom is trying to serve, we've gone so far as to liken that to eastman-kodak trying to sell 35 millimeter film to kids who are using digital cameras. we just don't think that business model is relevant in the future. that's why we've had a negative opinion on the stock.
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that overwhelms any of the near-term, you know, signs of optimism you could try and look for in the report. >> they get a revenue share from the snapchat deal. they'll be able to have some pretty valuable real estate on snapchat's discover platform. they're basically paying for live stories on the vmas, and the b.e.t. awards does any of that move the needle? >> yeah, you know, it's -- i would liken it to a catch 22. the great news is advertisers desperately want to reach young people, and increasingly they're hard to reach. that's the irony and viacom's core assets is they serve those audiences and so the extent they can find ways to reach them that ought to be a good thing. you know, our issue is that the legacy way of building that business resulted in a television network that generated -- still generates 40% or so operating margins, 40% return on invested capital.
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and, you know, so if you -- we don't see any way that you can replicate those sorts of economics on a snapchat platform anywhere else. that's not that those aren't great platforms that create a lot of value. but they don't need to generate 40% rlic to create value. when you're training a viewer from live tv to snapchat the economics are radically different, and not built for the way viacom is built. >> todd, your parallel to kodak is striking because kodak was famously dismissive of digital cameras at that time. are you not arguing cable companies and content providers are ignoring the reality? i mean they're well aware of it, aren't they? >> yeah, you know, i think certainly privately and increasingly publicly, they are. i think it took awhile to sink in. because the evidence took awhile to build. i mean, we have been thinking for awhile now that the original sin for the entire industry goes back to the decision to allow
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netflix, specifically, to access a lot of the fantastic content for what we would argue is a very low price. you know, taking a view that, well, it's not really going to matter and we'll take netflix's money because it's incremental and high margin, and we can just layer it on top. but, i think the reality is hard to refute now is that what that ushered in was trained people that hey, you can watch this stuff in a much better way for much less expense, and no advertising, and you've trained everybody to prefer -- not everybody, but most people, especially young people, to prefer to watch that way. and so, you've got this conundrum, that's where the audiences are. so if you don't put your content there, you don't reach them. but when you do put your content there, you've got this sort of cannibalization effect where you're trading into a much lower, much different business, and i'm not sure there's an easy way out without -- or without a
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kind of total reset of these business expectations. >> well, we'll get some more commentary from disney this evening. they're obviously well aware of a lot of these questions that the we're asking, but todd we appreciate your time this morning. >> thank you very much. . >> the senior analyst at bernstein. >> coming up is chesapeake energy headed for bankruptcy? many are concerned as the stock fell more than 30% yesterday and is down close to 90% in the last year. we'll get more on chesapeake with bethany mclean when we come back. don't go away.
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another volatile session today on wall street. and times like these is safe and boring your best option? mike? >> john, really who's new in the last several weeks is that the safe and boring options are starting to pay you a little bit more. there's sort of carnage across the markets has also reached some of the relatively safe areas outside the stock market that some of the yields you can get by taking just a little bit
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more risk versus stocks are actually somewhat highest that they've been in about four years. if you look at the very broad investment grade corporate bond like the lqd yielding 3.5%, now you compare that to the ten-year treasury yesterday at 1.7 and you're getting that extra bit of premium. you can go a little bit further out the risk curve and look at the lowest tier of investment grade debt so it's still high grade debt but on the lower end of it that's baa rated bonds for the 2qltb and that's up 4.5% yields right now and then a little bit more of an obscure area preferred stocks, there even is an etf under pff yielding about 6%. a lot of that is bank issued preferred stock. you could even capture some of those returns at a greater discount through things like closed ends funds. a lot of this sounds kind of obscure. one of the complaints we had for much of the bull market was that there really was no good
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alternative to stocks. everything else was very low return. i do think by taking a little bit more risk you're finally getting paid a little bit for it. these aren't immune to things like recession fears flaring up further or anything else. but they definitely are somewhat more conservative and will let you probably sleep at night and maybe collect a little bit of income along the way. >> mike santoli with a good illustration of how sentiment has changed. you can get a lot more on cnbc pro. in the mean time a couple minutes from europe's close. earlier this morning jim cramer said you should keep your eye on tech stocks. take a listen. >> watch facebook, watch netflix, watch alphabet. these stocks are so oversold it's pretty realistic that they could bounce when europe closes. >> yet europe's going to close squarely in the red again. >> yes, we are off our lows but heading down back towards them. obviously the banks are the key focus in europe. just check out the losses here, 2%, 2.5%, 2% for the year so for. the broader index in europe is
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now down 15% and the banks are very much at the helm of that. a lot of people talking about deutsche bank. today the co-ceo of deutsche bank wrote a memo saying that the balance sheet was absolutely rock solid and that they could effectively pay back the high yielding forms for the regulators made them take on. stock opened up, yesterday it was down 10% on that fear. opened up 5%, and is currently down 3.7. but again it is off its lows. other banks around europe are further in the red today. the main concern in europe is basically that you're going to recognize a nonperforming loans on the bank's balance sheet and therefore they'll have to raise cash and therefore dilute their stock, or if they have a more extreme case of bailing to the senior bond holders to those losses. so that's kind of a fear around but you see credit suisse down another 8%. ubs is falling. the spanish banks, italian banks bearing the brunt of the selling as their local sovereign debt market sells off just very slightly. there you see where we are in
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italy at the moment. goldman sachs has said systemic concerns about the european banks are overflown. ievlt e. systemic that it could come into this market are overblown. so far no evidence of funding strain in the euro/dollar market but that would be a big deal involving central banks i would have that. nonetheless, that's where we are. this is an unintended consequence of the european central bank pushing these negative yields into the mouths of the bank ceos. they don't make money in that environment and generally lending around europe is much less profitable if the yields are moving negative and of course over the last five weeks you doubled the number of bond markets that have negative yields. because the euro stubbornly is rising, that's another argument, the expectation is in part of the ecb will double down on negative interest rates. today jpmorgan suggested by the end of the year the deposit rate could be 0.7%.
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that means less stability and more pain presumably on lending for the banks as they try ironically to stimulate the banks into lending. there's a lot of negative circles set up here. finally i just want to mention where we are on the miners. of course we had a couple of weeks where the miners had great short covering from australia, well that's over. back to you. >> all right. ending on an uplifting note. >> simon hobbs. up next, remember that wild ride chesapeake had? down over 33% yesterday. and vanity fair's bethany mclean is up next with more on that company. stay tuned. meritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that.
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td ameritrade.
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good morning, everyone, i'm sue herera. here is your cnbc news update. florida senator bill nelson calling for the ntsb to investigate the royal caribbean cruise ship that ran into a big storm in the atlantic ocean over the weekend. the ship was forced back to its home port. no injuries were reported, and the ship was slightly damaged. rioters clashed with police overnight in hong kong during new year's celebrations. the unrest started when local authorities tried to prevent street food sellers from operating last night. police firing warning shots in the air and using pepper spray to try and disperse the crowd. scientists are analyzing a small blue object that plummeted from the sky and killed a man in southern india. authorities say that it was a meteorite. local officials are examining the five foot wide crater where
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that object hit. and if you watched the super bowl and ordered from pizza hut, you were not alone. the chain saying it hit a digital sales record selling nearly $12 million in food for the contest. that's up $2 million from last year's super bowl. and that's the news update this hour. back downtown to "squawk alley." carl, back to you. >> all right, sue, thank you very much. sue herera. concerns over the real health of chesapeake energy surfacing following the california natick fall of its shares yesterday. before the company straightout side it had no plans to seek bankruptcy but could this be an early warning sign of something much greater to come. bethany mclean is the contributing editor at "vanity fair" and a cnbc contributor. she joins us this morning from chicago. bethany, good to see you again. good morning. >> you, too. good morning. >> i would ask you if you've seen this movie before, but, we're obviously leery of making any kind of broad parallel to past chapters. >> uh-huh. look, there are some superficial similarities between chesapeake and that famous energy company from whatever it was, a decade
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and a half ago, oh, my goodness. but there's a big difference in that chesapeake has always been a little bit of a sketchy company but it's not the sketchiness that is causing possible impending doom, it's the falling price of gas. whereas that other company, it was the sketchiness that caused its doom. >> right. so, how do we evaluate its prospects short of knowing what oil is going to do? >> right, well there isn't really any way to know. i mean, chesapeake's prospects aren't great, right? they've already cut the dividends on the preferred shares. these are not things that healthy companies do. but, it is a source of mine told me that he and his partner always used to have a great debate about chesapeake because one of them would say but it's a ponzi scheme. by which he meant that the company's operating cash flow was always hugely negative, it financed itself by asset sales and by debt. his partner would say yeah, but the gas is real. and if gas were at $7 for instance, this thing would be a
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rip-roaring success. >> bethany, how unique chesapeake in that regard? i mean, the leverage, the reliance on natural gas and oil, it's what's concerning a lot of people about this market, given what energy prices are doing. >> right. well that's why partly why i think chesapeake is so interesting. is it's not just about chesapeake, right? this is a sign of really deep problems in this whole sector. because i don't think anybody's business model works where gas and oil prices are now. and, companies invested with the expectations of much higher prices. and it's really ironic, actually, for a lot of the fracking companies, chesapeake in particular, because the very techniques that they pioneered have actually helped to lower the price of natural gas. thereby kind of bringing about their own doom. so there's a real irony at the heart of all of this, too. >> and there's a real debt payment coming due next week, bethany, that depends, really, on the company's amount that's
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still left under its revolving credit facility, whether it still has gasoline and then just cash flow. is there anything the company can do to get creative, to assure the market going into that debt payment? >> i think they're trying to be as creative as they can and some of it depends on what the market is -- what the market is willing to take and thus far it's -- it's -- it's not looking great. but never say never. >> mcclendon himself, bethany, if all this ends badly, i mean by that i mean some sort of filing, how much blame lays at his feet? other people tend to look to things like an era of low interest rates that encouraged overproduction, an era in which we were all chanting drill, baby, drill, that kind of thing. >> right. in a very odd way, chesapeake is also being penalized not only by its own developments to lower the price of gas, but also because they were so early. so think invested, when dnd and
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paid more for assets when gas was at a much higher price. i don't think much of this, weirdly enough, is going to land at the feet of aubrey mcclendon and i think that has a lot to do with personality as much as anything else. there are certain people who have a charisma about them, or seem to be able to make other people even supposedly jaded skeptical bankers and investors into total believers. and he's one of those people. i suspect he will -- he will skate through and we'll see him raising money for another venture a few years out. >> that's going to make a great -- >> continuing to run the one he has. >> that's going to make a great "vanity fair" piece down the road, bethany. thank you so much. good to see you again. bethany mclean joining us from chicago. >> up next, voting is now under way in new hampshire. with donald trump and bernie sanders the probable favorites to win today's primary, we're live on the ground in manchester with an update. but before we're there we're in chicago. rick santelli, what are you watching today?
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>> wow, i'll tell you what we have negative rates just simmering around the globe. we're going to concentrate on that, and atlanta, gdp now. 2.5%. doesn't necessarily sound recessionary, but is it as strong as it appears? all after the break.
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coming up on the halftime show, is there a looming crisis in the european banks? the stocks are selling off again today so we assess the situation
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with the ft's jillian tett. plus why investor paul meeks is buying amid the wreckage and one firm upgrading sales force despite the plunge. should you jump in? it's our call of the day. see you in about 15. >> sounds good, scott. thanks. meanwhile the presidential race heating up with voting already starting in new hampshire. our john harwood is live in manchester with more. good morning, john. >> good morning, carl. you know we've talked a lot this campaign season about the influence of donald trump, and the way that he has capitalized on discontent with the political establishment to take the republican primary race by storm. of course, he's poised to win a victory in the new hampshire primary today if the polls are anything close to accurate. but the other big story, of course, has been bernie sanders. the democratic socialist senator from vermont began his campaign against hillary clinton for the democratic nomination as a dramatic underdog. but he essentially tied her in iowa, he's leading in new hampshire. and we went to a restaurant in concord, new hampshire, to try to talk to voters about exactly
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what they see in bernie sanders. >> everything that i've seen about bernie is just legitimate. >> bernie says in every speech that things in the country are controlled by superrich people. millionaires and billionaires and not for the average person. >> these people are running the country the way that they want to run it so they can keep it how they want to be. just because they have the money to do it. and i'm a lower income person. i live on the like lower end of things. but like i said in the last couple of weeks i've gotten more interested in bernie. >> you're feeling the bern? >> yes. >> it scares me that the republican parties are trying to defund planned parenthood. >> that's a huge issue that hillary is pushing. she has the support of the head of planned parenthood. >> right. >> is that persuasive to you. does that make an impression on you? >> i like that that's important to her, yeah. >> do you think that the issue with drugs and opioids is a big problem? >> huge. >> tell me about that problem. >> i mean i feel like it starts with the providers. overprescribing pain medications. >> bernie says we're going to have a political revolution, and
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hillary's response is, that's not realistic. i've got the more realistic plans and i've got the experience to get them done. what do you think about that? >> a massive revolution and overhaul is not going to happen overnight. and not going to happen with one president. but we need somebody who's going to try, and really put that effort in. there's so many people out there that need help here in concord we have a huge homeless problem. the facilities and the people are there to help, but the money to get it done is just not. >> so far that message has been selling very well here in new hampshire. take a look at these polls heading in to voting today. most polls close at 7:00 tonight. bernie sanders goes in with a double digit lead over hillary clinton. we have a wide variation in the extent of that lead. some polls have him over 20 prps the goal of the clinton campaign would be to get it to within double din its. that would be a good showing for her tonight heading south into south carolina and big caucuses in nevada, as well. on the republican side, donald trump continues to maintain a
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lead although he's come down a little bit and there's a mad scramble for second place between john kasich, the governor of ohio, former florida governor jeb bush, marco rubio the senator from florida who has hoped to become the establishment candidate, also ted cruz and chris christie coming up from behind trying to see if he can close up ground. both of these races, carl, are likely to extend deep into this primary season. that's going to be the message of new hampshire. >> i'll take it, john, thanks. now let's get to the cme group, rick santelli with the santelli exchange. >> good morning, jon. we all know that japan and the eurozone are really pedal to the metal with regard to quantitative easing. let's look at some charts, shall we? we know quantitative easing is a currency buster for the country of qe origin. but hold the phone. not so. let's look at a chart of the euro versus dollar. last time was at these levels was october of last year.
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let's open the chart up two years. the reason i open it up two years is, this is looking like it could really clear a zone and have some room. you think that has room? let's look at the dollar/yen. last time it was here was in november of '14. open that chart up to three years, lots of room. the reason i bring this up, unintended consequences. i'm calling this segment, 4 at 40. what do i mean by that? okay. looking at just the top four economies with the most negative rates, switzerland at 15 years. japan out to 10 years. germany, or the eurozone high quality sovereign benchmark out to 8 years. the netherland out to 7 years. add it up. that's 40 years with the top four. we're not even going for those six years, belgium, france, austria. we're not going less. where you have czechoslovakia, denmark, we're just stopping at top four and it's a cumulative 40 years. okay.
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so negative rates, permeating. it's an offshoot of central banking activity. but, pushing rates down is probably due to slow growth. the extra horsepower is through to the central planning. while all that's going on, let's look at what's happening in the u.s. listen we all know that a lot of the data points started going really sour with the big overhang of inventory mid third quarter early fourth quarter of last year. atlanta gdp now just updated. up a couple of tenths to 2.5. now we know there's this funny give and take between weak fourth quarters, strong first quarters and how that tends to average out throughout the rest of the year. but even though the glide pack is weak we definitely have some growth here and in terms of the dollar weakness, maybe multinationals will have a bit of a reprieve. maybe along with the federal reserve. jon fortt, back to you. >> all right, thanks, rick. up next, a brutal year for enterprise tech. names like red hot and autodesk down about 25% so far in 2016.
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is this sector in trouble or is it overdone? we'll ask that question to the cfo of red hat when we come right back.
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tech and enterprise techs still under pressure after a rough start to the week. take a look at red hat right now. was down 8% yesterday. it's up today. how long should we expect these choppy waters to continue for tech stocks? frank calderoni is the cfo of red hat, a member of the global
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cfo council, former cfo of cisco and others. frank, always great to have you. let's talk red hat, specifically. >> jon, good to see you. >> great to see you. for a moment, you guys hit an all-time high a month and a half ago, a 52-week low, i think, yesterday. you've had four straight quarters, correct me if i'm wrong, of 20% plus constant currency revenue growth. so in your mind, what is this market action really about? >> you know, jon, it's -- identify been around for a while, a number of cycles the that kind of go up and down. it's always great when the market's kind of rising in an outward direction. but i think we see these ups and downs from time to time. and the key thing for us, and most companies, is really, is to focus on the fundamentals. which is, how do you run your business over the long-term, and really what your customers are looking for and making sure you're meeting those requirements. >> so tell me, the fear, if i've got it right, is that enterprise
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spending is slowing dramatically as companies, your customers, come to grips with the global economy's affect on demand. is there a twist on that that investors perhaps aren't seeing in your business and how you're running it? how do you adjust for that? >> so, you know, as you mentioned, jon, if you look back, the last four quarters, we have been growing at a constant currency growth rate. we've had 55 sequential quarters of growth. and i think that kind of fits into the model that red hat has, as far as open sourced. and really addressing some of the needs of our customers. customers are looking for, you know, they focus on the spend dollars. they're also focused on flexibility and agility, which is kind of what open source brings. we deliver kind of a market that kind of flies on an open source basis. and i think customers are really resonating with that. we've got to focus on -- i'm sorry, jon? >> no, continue that thought,
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please. perhaps tack on to it. are any of your customers going away, though? 15 years ago, in the dotcom bust, we saw entire customer bases evaporate because the businesses that they were buying this enterprise equipment and software for just weren't viable. are you seeing that at all? could that happen? >> no, not at all. i mean, again, our customers are investing in red hat, because of the fundamentals that we deliver. we deliver an operating system, we deliver a software stack, that really plays into what they're trying to drive, as far as building cloud-based ecosystems, both on the private side, on the public side, and that kind of spend is continuing to grow. i mean, if you look at, as you said, the growth we've seen, a lot of surveys that have talked about i.t. spending going into 2016 have showed continued growth in that spend. so we think we're well positioned. we're meeting some of the demands and requirements that customers have. and we've got to, again, as i said, be focused on the
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long-term as far as making sure we're delivering the products to technology that our customers need and meeting their expectations. >> frank, i hate to bring up forex, but it's such a large dynamic. people try to spin a bull case on tech, that a moderating dollar removes a giant earnings headwind. to what degree do you give that credence going into '16? >> i'm sorry, i couldn't hear you, carl. could you repeat the question? >> yeah, on forex, how likely is it that the dollar actually creates an earnings tailwind later in the year? >> i mean, it's hard to predict. the dollar clearly is working against most companies over the last few years. we'll have to see how that kind of plays out. for us, you know, it's impacted our growth rate by about six points this past year. you know, at some point, same thing with the markets, you'll see the currency as far as where the dollar plays on a global basis kind of change. right now, it's really hard to predict. i think we'll have to way and see how the economy, the global economy progresses throughout
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this year and how the dollar fares in that time frame. >> well, good to hear from you, frank calderoni, cfo of red hat, veteran silicon valley cfo. when we come back, a major shake up in silicon valley. the cfo of zenefit stepping down. what happened and why, when we come back.
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could it be the dark side of companies growing fast? zenefits, the human resources company, says its ceo, parker conrad, is stepping down among compliance issues. some companies were selling insurance without proper licenses. zenefit has been valued at more than $4 million, including founders funders like comcast ventures. conrad himself has been on this show many times. chief operating officer david saks is going to take over as the new ceo. >> what'd you think of jason's comments regarding zenefits and the aggressiveness of some of these models? >> it's a very important point, if you're not a consumer company, those consumers may not stand up for you when the regulators come.
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>> and the investors thought just hitting revenue targets was the biggest obstacle. certainly, they have a lot to work with. meantime, it's been, since mid-december, the dow has not had two consecutive days of nontriple-digit moves. so we're in that range right here, down 81. let's get back to headquarters. scott walker and the half. thanks so much. welcome to "the halftime show." let's meet the starting line, joe terranova is here along with stephanie lin and john and pete najarian. our game plan looks like this. through the clouds, why one firm just upgraded sales force and why the stock has gotten just too cheap to pass up. the tech trade. investor paul meeks is buying amid the rubble. where he sees the sector heading from here. we begin with the markets and growing concerns about the health of the global banking system. here's how that trade looks at this hour. you can see, most u.s. banks


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